In the quarter ended Sept. 29, 2018, the company took a bad-debt reserve
charge of $14 million related to the bankruptcy filing of Sears Holdings
Corporation. As a result, GAAP operating profit of $257 million declined
1 percent and GAAP diluted earnings per share were $0.47. Adjusted
operating profit excluding actions of $278 million increased 1 percent,
and adjusted EPS excluding actions was $0.52.

“Our overall results were good and in line with our guidance on a pro
forma basis. We made progress on our long-term goals of continued
organic sales growth, higher profit margins, and reduced debt leverage,”
said Hanes Chief Executive Officer Gerald W. Evans Jr. “We are
diligently focused on delivering the fourth quarter, and we are off to a
strong start in October with solid order bookings across our segments.”

There are several factors supporting a confident outlook, Evans noted.
“Global Champion growth outside the mass channel, which was up 40
percent in constant currency in the quarter, is expected to remain
strong,” he said. “And while we were disappointed that Innerwear sales
were lower than expected in the third quarter, consumer demand was
strong, and we believe that continued underlying strength supports our
outlook for improvement.”

Callouts for Third-Quarter 2018 Financial Results

Continued Double-Digit Growth in Champion Drives Organic Growth.
Champion sales increased 30 percent in the third quarter on a
constant-currency basis with strong double-digit growth in the United
States, Asia and Europe on top of strong double-digit growth in the
year-ago quarter. Excluding the mass channel, global Champion
constant-currency sales increased 40 percent.

Consumer-Directed Channels Contribute to Sales Growth.
Third-quarter net sales benefited from a 15 percent increase in the
consumer-directed channels of online and company-owned retail stores,
which accounted for 21 percent of total company sales in the quarter.

Net Debt Reduced and Debt Leverage Lowered. Hanes used its
free-cash generation to pay down debt by approximately $115 million in
the third quarter, lowering its debt leverage to 3.8 times on a net
debt-to-EBITDA basis.

Innerwear basics sales decreased, with socks and panties sales down and
men’s underwear sales up. All three categories had point-of-sale growth.
Products featuring innovation now account for 20 percent of basics sales.

Innerwear intimates sales decreased, although the ongoing implementation
of revitalization plans for shapewear and bras are beginning to show
progress. New product designs and innovation will continue to be rolled
out through the first half of 2019.

Hanes has updated full-year financial guidance for 2018 to reflect
year-to-date results, the bankruptcy of Sears Holdings, the
strengthening dollar, and other factors. After the effect of the Sears
bankruptcy and negative currency trends since the company’s prior
outlook, the updated guidance represents a tightening of previous ranges
for net sales, operating profit and EPS.

The company expects full-year 2018 net sales of $6.735 billion to $6.775
billion, GAAP operating profit of $860 million to $875 million, adjusted
operating profit excluding actions of $940 million to $955 million, GAAP
EPS for continuing operations of $1.50 to $1.54, adjusted EPS excluding
actions for continuing operations of $1.69 to $1.73, and net cash from
operations of $625 million to $675 million. The EPS ranges include
approximately $0.05 of adverse effect from the Sears Holdings bankruptcy
and currency versus prior guidance.

In addition to the $14 millionSears Holdings bad-debt charge, the
updated guidance assumes no sales or profit contribution in the fourth
quarter from Sears, which accounted for approximately 1 percent of total
year-to-date company sales. Prior to the bankruptcy filing, Hanes had
expected fourth-quarter sales of approximately $15 million and operating
profit of approximately $5 million from Sears.

Compared with the company’s previous outlook for foreign exchange rates,
the company expects the strengthening dollar to have a greater negative
currency effect on net sales. For the fourth quarter, the company
expects currency exchange rates to reduce sales by $29 million year over
year, up from the previous outlook of a $12 million headwind.

Updated full-year interest expense and other guidance is $221 million,
up from previous guidance of $207 million primarily as a result of the
yearlong effect of higher interest rates on variable-rate debt. The
company expects the 2018 full-year tax rate to approach 15 percent, down
from previous guidance of approximately 16 percent.

Fourth-Quarter Guidance. The company expects fourth-quarter net
sales of approximately $1.70 billion to $1.74 billion. The midpoint of
guidance represents approximately 5 percent growth versus the
fourth-quarter a year ago and organic constant currency growth of
approximately 3.5 percent.

The company expects Innerwear sales in the quarter to be comparable to a
year ago, representing a significant improvement from the third-quarter
year-over-year results. The outlook is based on strong fundamentals,
early-quarter order bookings, and an expectation for shipments to more
closely match strong consumer purchase rates that began in the third
quarter.

Strong Champion growth is expected to continue to drive increased
sales in the Activewear and International segments in the fourth
quarter. Based on strong order bookings through the first half of 2019, Champion
growth is expected to continue at a significant double-digit rate.

Fourth-quarter GAAP operating profit is expected to be in the range of
$236 million to $251 million, and GAAP EPS is expected to be $0.42 to
$0.46.

Fourth-quarter adjusted operating profit excluding actions is expected
to be in the range of $251 million to $266 million. Adjusted EPS
excluding actions for the quarter is expected to be $0.46 to $0.50.

The company expects pretax charges related to acquisition integration
and other actions in the fourth quarter of approximately $15 million.

Hanes has updated its quarterly frequently-asked-questions document,
which is available at www.Hanes.com/faq.

Adjusted EPS is defined as diluted EPS from continuing operations
excluding actions and the tax effect on actions. Adjusted net income is
defined as net income from continuing operations excluding actions and
the tax effect on actions. Adjusted operating profit is defined as
operating profit excluding actions. Adjusted gross profit is defined as
gross profit excluding actions. Adjusted SG&A is defined as selling,
general and administrative expenses excluding actions.

Charges for actions taken year to date and for guidance for the full
year primarily represent acquisition and integration costs related to
Hanes Europe Innerwear, Hanes Australasia, Champion Europe, Alternative
Apparel and Bras N Things, and other costs related to supply chain
network changes. Acquisition and integration costs include legal fees,
consulting fees, bank fees, severance costs, certain purchase accounting
items, facility closures, inventory write-offs, information technology
integration costs and similar charges. While these costs are not
operational in nature and are not expected to continue for any singular
transaction on an ongoing basis, similar types of costs, expenses and
charges have occurred in prior periods and may recur in the future
depending upon acquisition activity.

Hanes has chosen to present these non‐GAAP measures to investors to
enable additional analyses of past, present and future operating
performance and as a supplemental means of evaluating operations absent
the effect of acquisitions and other actions. Hanes believes these
non-GAAP measures provide management and investors with valuable
supplemental information for analyzing the operating performance of the
company’s ongoing business during each period presented without giving
effect to costs associated with the execution and integration of any of
the aforementioned actions taken.

In addition, the company has chosen to present EBITDA and adjusted
EBITDA to investors because it considers these measures to be an
important supplemental means of evaluating operating performance. EBITDA
is defined as earnings before interest, taxes, depreciation and
amortization. Adjusted EBITDA is defined as EBITDA excluding actions and
stock compensation expense. Hanes believes that EBITDA and adjusted
EBITDA are frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in the industry, and
management uses EBITDA and adjusted EBITDA for planning purposes in
connection with setting its capital allocation strategy. EBITDA and
adjusted EBITDA should not, however, be considered as measures of
discretionary cash available to invest in the growth of the business.

For the third-quarter 2018, Hanes has also chosen to present these
non-GAAP measures to investors on a pro forma basis, excluding the
effect of the bankruptcy of Sears Holdings Corporation. The company
believes these pro forma adjusted financial results provide management
and investors with increased clarity on the underlying performance of
the business.

Hanes is a global company that reports financial information in U.S.
dollars in accordance with GAAP. As a supplement to the company’s
reported operating results, Hanes also presents constant-currency
financial information, which is a non-GAAP financial measure that
excludes the impact of translating foreign currencies into U.S. dollars.
The company uses constant-currency information to provide a framework to
assess how the business performed excluding the effects of changes in
the rates used to calculate foreign currency translation.

Hanes believes this information is useful to management and investors to
facilitate comparison of operating results and better identify trends in
the company’s businesses.

To calculate foreign currency translation on a constant currency basis,
operating results for the current-year period for entities reporting in
currencies other than the U.S. dollar are translated into U.S. dollars
at the average exchange rates in effect during the comparable period of
the prior year (rather than the actual exchange rates in effect during
the current year period).

Non‐GAAP financial measures have limitations as analytical tools and
should not be considered in isolation or as an alternative to, or
substitute for, financial results prepared in accordance with GAAP.
Further, the non-GAAP measures presented may be different from non-GAAP
measures with similar or identical names presented by other companies.

In the first, second and third quarters of 2018, Hanes incurred nearly
$20 million, $25 million, and nearly $21 million, respectively, in
pretax charges for acquisition-related and integration actions. In the
first, second and third quarters of 2017, Hanes incurred $38 million,
$26 million and $17 million, respectively, and in charges for
acquisition-related and integration actions.

For 2018 guidance, Hanes expects full-year GAAP EPS of $1.50 to $1.54
with anticipated pretax charges for acquisition-related and integration
costs and other actions of approximately $80 million, which results in
adjusted EPS guidance of $1.69 to $1.73. For the fourth quarter, the
company expects GAAP EPS of $0.42 to $0.46 with anticipated pretax
charges for acquisition-related and integration costs and other actions
of approximately $15 million, which results in adjusted EPS guidance of
$0.46 to $0.50.

Webcast Conference Call

Hanes will host an Internet webcast of its second-quarter investor
conference call at 8:30 a.m. EDT today, Nov. 1, 2018. The broadcast,
which will consist of prepared remarks followed by a question-and-answer
session, may be accessed at www.Hanes.com/investors.
The call is expected to conclude by 9:30 a.m.

An archived replay of the conference call webcast will be available in
the investors section of the Hanes corporate website. A telephone
playback will be available from approximately noon EDT today through
midnight ESTNov. 8, 2018. The replay will be available by calling
toll-free (855) 859-2056 or by toll call at (404) 537-3406. The replay
ID is 5491225.

Cautionary Statement Concerning Forward-Looking Statements

This press release contains certain forward-looking statements, as
defined under U.S. federal securities laws, with respect to our
long-term goals and trends associated with our business, as well as
guidance as to future performance. In particular, among others,
statements regarding future impact of the Sears bankruptcy, statements
regarding outlook for improvement in demand for the global Champion
brand, and statements following the heading 2018 Financial Guidance, are
forward-looking statements. These forward-looking statements are based
on our current intent, beliefs, plans and expectations. Readers are
cautioned not to place any undue reliance on any forward-looking
statements. Forward-looking statements necessarily involve risks and
uncertainties, many of which are outside of our control, that could
cause actual results to differ materially from such statements and from
our historical results and experience. These risks and uncertainties
include such things as: the highly competitive and evolving nature of
the industry in which we compete; the rapidly changing retail
environment; any inadequacy, interruption, integration failure or
security failure with respect to our information technology; the impact
of significant fluctuations and volatility in various input costs, such
as cotton and oil-related materials, utilities, freight and wages; our
ability to properly manage strategic projects; significant fluctuations
in foreign exchange rates; our ability to attract and retain a senior
management team with the core competencies needed to support our growth
in global markets; legal, regulatory, political and economic risks
related to our international operations; our ability to successfully
integrate acquired businesses; our reliance on a relatively small number
of customers for a significant portion of our sales; and other risks
identified from time to time in our most recent Securities and Exchange
Commission reports, including our annual report on Form 10-K and
quarterly reports on Form 10-Q. Since it is not possible to predict or
identify all of the risks, uncertainties and other factors that may
affect future results, the above list should not be considered a
complete list. Any forward-looking statement speaks only as of the date
on which such statement is made, and HanesBrands undertakes no
obligation to update or revise any forward-looking statement, whether as
a result of new information, future events or otherwise, other than as
required by law.

HanesBrands

HanesBrands, based in Winston-Salem, N.C., is a socially responsible
leading marketer of everyday basic innerwear and activewear apparel in
the Americas, Europe, Australia and Asia-Pacific. The company sells its
products under some of the world’s strongest apparel brands, including Hanes,
Champion, Maidenform, DIM,Bali, Playtex,
Bonds, JMS/Just My Size, Nur Die/Nur Der, L’eggs, Lovable,
Wonderbra, Berlei, Alternative, Bras N Things, and Gear for
Sports. The company sells T-shirts, bras, panties, shapewear,
underwear, socks, hosiery, and activewear produced in the company’s
low-cost global supply chain. A member of the S&P 500 stock index, Hanes
has approximately 68,000 employees in more than 40 countries and is
ranked No. 432 on the Fortune 500 list of America’s largest companies by
sales. Hanes takes pride in its strong reputation for ethical business
practices. Connect with HanesBrands at www.Hanes.com/corporate
or via social media (Twitter: @hanesbrands,
and Facebook: www.facebook.com/hanesbrandsinc).

TABLE 1

HANESBRANDS INC.

Condensed Consolidated Statements of Income

(in thousands, except per-share amounts)

(Unaudited)

Quarter Ended

Nine Months Ended

September 29,

September 30,

September 29,

September 30,

2018

2017

% Change

2018

2017

% Change

Net sales

$

1,848,707

$

1,799,270

2.7

%

$

5,035,654

$

4,826,235

4.3

%

Cost of sales

1,136,040

1,120,813

3,084,110

2,962,345

Gross profit

712,667

678,457

5.0

%

1,951,544

1,863,890

4.7

%

As a % of net sales

38.5

%

37.7

%

38.8

%

38.6

%

Selling, general and administrative expenses

455,778

419,991

1,328,534

1,245,290

As a % of net sales

24.7

%

23.3

%

26.4

%

25.8

%

Operating profit

256,889

258,466

(0.6

)%

623,010

618,600

0.7

%

As a % of net sales

13.9

%

14.4

%

12.4

%

12.8

%

Other expenses

7,285

7,043

19,616

20,010

Interest expense, net

52,795

43,917

146,988

130,184

Income from continuing operations before income tax expense

196,809

207,506

456,406

468,406

Income tax expense

25,388

4,150

64,943

19,804

Income from continuing operations

171,421

203,356

(15.7

)%

391,463

448,602

(12.7

)%

Loss from discontinued operations, net of tax

—

—

—

(2,097

)

Net income

$

171,421

$

203,356

(15.7

)%

$

391,463

$

446,505

(12.3

)%

Earnings (loss) per share - basic:

Continuing operations

$

0.47

$

0.56

$

1.08

$

1.22

Discontinued operations

—

—

—

(0.01

)

Net income

$

0.47

$

0.56

(16.1

)%

$

1.08

$

1.21

(10.7

)%

Earnings (loss) per share - diluted:

Continuing operations

$

0.47

$

0.55

$

1.07

$

1.21

Discontinued operations

—

—

—

(0.01

)

Net income

$

0.47

$

0.55

(14.5

)%

$

1.07

$

1.20

(10.8

)%

Weighted average shares outstanding:

Basic

363,510

366,083

363,338

368,885

Diluted

364,638

368,160

364,527

370,947

TABLE 2

HANESBRANDS INC.

Supplemental Financial Information

(in thousands)

(Unaudited)

Quarter Ended

Nine Months Ended

September 29,

September 30,

September 29,

September 30,

2018

2017

% Change

2018

2017

% Change

Segment net sales:

Innerwear

$

599,726

$

644,059

(6.9

)%

$

1,785,498

$

1,868,255

(4.4

)%

Activewear

554,953

519,496

6.8

1,306,863

1,226,595

6.5

International

619,435

556,730

11.3

1,735,184

1,509,370

15.0

Other

74,593

78,985

(5.6

)

208,109

222,015

(6.3

)

Total net sales

$

1,848,707

$

1,799,270

2.7

%

$

5,035,654

$

4,826,235

4.3

%

Segment operating profit1:

Innerwear

$

132,244

$

152,983

(13.6

)%

$

392,792

$

447,233

(12.2

)%

Activewear

93,605

87,497

7.0

189,400

189,819

(0.2

)

International

99,624

78,394

27.1

253,243

191,203

32.4

Other

8,400

12,109

(30.6

)

18,187

22,453

(19.0

)

General corporate expenses/other

(56,252

)

(55,643

)

1.1

(165,098

)

(150,805

)

9.5

Acquisition, integration and other action-related charges

(20,732

)

(16,874

)

22.9

(65,514

)

(81,303

)

(19.4

)

Total operating profit

$

256,889

$

258,466

(0.6

)%

$

623,010

$

618,600

0.7

%

1

In the first quarter of 2018, HanesBrands eliminated the allocation
of certain corporate overhead selling, general and administrative
expenses related to the legal, human resources, information
technology, finance and real estate departments to the segments, in
order to reflect the manner in which the business is managed and
results are reviewed by the chief executive officer, who is
HanesBrands’ chief operating decision maker. Prior year segment
operating profit disclosures have been revised to conform to the
current year presentation.

The following tables present a reconciliation of total reported net
sales to organic constant currency net sales for the quarter and
nine months ended September 29, 2018 and a comparison to prior year:

Effect of the change in foreign currency exchange rates
year-over-year. Calculated by applying prior period exchange rates
to the current year net sales. This calculation excludes entities
acquired within the past twelve months.

TABLE 3

HANESBRANDS INC.

Condensed Consolidated Balance Sheets

(in thousands)

(Unaudited)

September 29,

December 30,

2018

2017

Assets

Cash and cash equivalents

$

398,499

$

421,566

Trade accounts receivable, net

1,044,516

903,318

Inventories

2,139,281

1,874,990

Other current assets

154,909

186,496

Total current assets

3,737,205

3,386,370

Property, net

607,649

623,991

Trademarks and other identifiable intangibles, net

1,586,148

1,402,857

Goodwill

1,252,524

1,167,007

Deferred tax assets

191,649

234,932

Other noncurrent assets

80,331

79,618

Total assets

$

7,455,506

$

6,894,775

Liabilities

Accounts payable and accrued liabilities

$

1,506,878

$

1,517,283

Notes payable

14,051

11,873

Accounts Receivable Securitization Facility

221,979

125,209

Current portion of long-term debt

284,220

124,380

Total current liabilities

2,027,128

1,778,745

Long-term debt

3,863,580

3,702,054

Pension and postretirement benefits

386,647

405,238

Other noncurrent liabilities

307,563

322,536

Total liabilities

6,584,918

6,208,573

Equity

870,588

686,202

Total liabilities and equity

$

7,455,506

$

6,894,775

TABLE 4

HANESBRANDS INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(Unaudited)

Nine Months Ended

September 29,

September 30,

2018

2017

Operating Activities:

Net income

$

391,463

$

446,505

Depreciation and amortization

99,314

89,762

Stock compensation expense

4,621

6,351

Other noncash items

2,781

(2,648

)

Changes in assets and liabilities, net

(356,890

)

(208,880

)

Net cash from operating activities

141,289

331,090

Investing Activities:

Purchases/sales of property and equipment, net, and other

(61,693

)

(56,020

)

Acquisition of business, net of cash acquired

(334,916

)

(524

)

Disposition of businesses

—

40,285

Net cash from investing activities

(396,609

)

(16,259

)

Financing Activities:

Cash dividends paid

(162,200

)

(165,211

)

Share repurchases

—

(299,919

)

Net borrowings on notes payable, debt and other

416,782

97,532

Net cash from financing activities

254,582

(367,598

)

Effect of changes in foreign currency exchange rates on cash

879

(7,433

)

Change in cash, cash equivalents and restricted cash

141

(60,200

)

Cash and cash equivalents at beginning of year

421,566

460,245

Cash, cash equivalents and restricted cash at end of period

421,707

400,045

Less restricted cash at end of period

23,208

—

Cash and cash equivalents per balance sheet at end of period

$

398,499

$

400,045

TABLE 5

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of Select GAAP Measures to Non-GAAP Measures

(in thousands, except per-share amounts)

(Unaudited)

Quarter Ended September 29, 2018

Acquisition,

Integration

Adjusted

and Other

Sears

Results

Action-

Bankruptcy

Excluding

Reported

%

related

Adjusted

%

Related

Sears

%

GAAP

Change

Charges

Results

Change

Charges

Bankruptcy

Change

Gross profit

712,667

5.0

%

11,760

724,427

6.4

%

—

724,427

6.4

%

As a % of net sales

38.5

%

39.2

%

39.2

%

—

Selling, general and administrative expenses

455,778

(8,972

)

446,806

(14,113

)

432,693

As a % of net sales

24.7

%

24.2

%

23.4

%

Operating profit

256,889

(0.6

)%

20,732

277,621

0.8

%

14,113

291,734

6.0

%

As a % of net sales

13.9

%

15.0

%

15.8

%

Interest and other expenses

60,080

—

60,080

—

60,080

Income tax expense

25,388

3,089

28,477

1,821

30,298

Diluted earnings per share from continuing operations

$

0.47

(14.5

)%

$

0.05

$

0.52

(13.3

)%

$

0.03

$

0.55

(8.3

)%

Nine Months Ended September 29, 2018

Acquisition,

Integration

Adjusted

and Other

Sears

Results

Action-

Bankruptcy

Excluding

Reported

%

related

Adjusted

%

Related

Sears

%

GAAP

Change

Charges

Results

Change

Charges

Bankruptcy

Change

Gross profit

1,951,544

4.7

%

33,596

1,985,140

5.3

%

—

1,985,140

5.3

%

As a % of net sales

38.8

%

39.4

%

39.4

%

Selling, general and administrative expenses

1,328,534

(31,918

)

1,296,616

(14,113

)

1,282,503

As a % of net sales

26.4

%

25.7

%

25.5

%

Operating profit

623,010

0.7

%

65,514

688,524

(1.6

)%

14,113

702,637

0.4

%

As a % of net sales

12.4

%

13.7

%

14.0

%

Interest and other expenses

166,604

36

166,640

—

166,640

Income tax expense

64,943

9,946

74,889

1,821

76,710

Diluted earnings per share from continuing operations

$

1.07

(11.6

)%

$

0.15

$

1.23

(13.4

)%

$

0.03

$

1.26

(11.3

)%

Quarter Ended

Nine Months Ended

September 29,

September 30,

September 29,

September 30,

2018

2017

2018

2017

Action and other related charges by category:

Hanes Europe Innerwear

$

7,076

$

8,136

$

24,107

$

38,528

Hanes Australasia

1,444

9,383

14,183

27,361

Champion Europe

350

2,528

3,308

8,096

Bras N Things

2,065

—

5,341

—

Smaller acquisitions and other action-related costs

9,797

(3,173

)

18,575

7,318

Debt refinance charges

—

—

(36

)

—

Tax effect on actions

(3,089

)

(338

)

(9,946

)

(4,204

)

Total action and other related charges

$

17,643

$

16,536

$

55,532

$

77,099

Last Twelve Months

September 29,

September 30,

2018

2017

EBITDA1:

Net income from continuing operations

$

6,852

$

604,327

Interest expense, net

191,239

171,337

Income tax expense

518,418

25,383

Depreciation and amortization

132,039

119,222

Total EBITDA

848,548

920,269

Total action and other related charges (excluding tax effect on
actions)

182,079

175,462

Stock compensation expense

21,852

21,839

Total EBITDA, as adjusted

$

1,052,479

$

1,117,570

Net debt:

Debt (current and long term debt and Accounts Receivable
Securitization Facility)

$

4,369,779

$

3,971,937

Notes payable

14,051

23,969

(Less) Cash and cash equivalents

(398,499

)

(400,045

)

Net debt

$

3,985,331

$

3,595,861

Net debt/EBITDA, as adjusted

3.8

3.2

1

Earnings from continuing operations before interest, taxes,
depreciation and amortization (EBITDA) is a non-GAAP financial
measure.

TABLE 6

HANESBRANDS INC.

Supplemental Financial Information

Reconciliation of GAAP Outlook to Adjusted Outlook

(in thousands, except per-share amounts)

(Unaudited)

Quarter Ended

Year Ended

December 29,

December 29,

2018

2018

Operating profit outlook, as calculated under GAAP

$236,000 to $251,000

$860,000 to $875,000

Acquisition, integration and other action-related charges

$15,000

$80,000

Operating profit outlook, as adjusted

$251,000 to $266,000

$940,000 to $955,000

Diluted earnings per share from continuing operations, as calculated
under GAAP